Economic background for Mexico in 2016

Although in the last years Mexico has shown a slow recovery after an atrophy in the US industrial production, its economy has maintained with a moderate annual growth rate of 2.4% in the Q4 of 2015.

That was reflected in the annual GDP in 0.4% points less,due to the collapse in the volume of oil production. This also means the devaluation of mexican peso against the dollar, and in the foreign exchange earnings. Of course, the fall of oil revenues affects in the public finances, because it represents a 25% of the sector incomes. Mexico is the second economic power in Latin America. Even though the country is a big producer and exporter of oil, it depends in an important way of the performance of US dollar.

In 2016, the expectation is a continuation of a gradual recovery, after a stagnating in the last year. This will increase its economic growth, that began in late 2015 with an 2.3 % predicting a 3% for 2017. Moreover, this year there will be elections inside the country, which represents major changes in politics and national economy, and influences in the relations with other countries.

Although the oil price will remain low, the government has cut public costs and has established policies to develop a solid macroeconomic background. Notwithstanding, Mexico has beaten the estimations of inflation closing the year with a 2.3%, giving a significative opportunity for foreign investment and private consumption.

Besides, authorities have driven the proposal of a gradual tax, in order to support the improvement of mexican people earnings. In addition, the government has acted to intervene in the currency market and stabilize the exchange rate. This will also imply adjustments on issues such as the tax law reform and the national financial markets, which will certainly continue to set Mexico as an investment option.

All the previous things are part of the current renovation of a monetary and fiscal policy as a solution of the last fall of the Mexican peso that affects the income per capita of the population.

2016 will be a year of challenge and change in economy, not only in Mexico, but also worldwide; A stage in which Mexico will demonstrate its slow but consistent strength to survive instability, keeping pace within a global economic policy that has an international impact.